Snow removal and parking expenses - questions and answers

To the Oella HOA:

There have recently been questions raised by many residents regarding the expenses for snow removal in the community. At the most recent HOA meeting, there were also specific inquiries regarding the allocation of parking assessments towards operating and capital expenses.

Currently, the parking assessment is levied on those residents who park in spaces or use right of way areas owned by the HOA in order to gain access to a public road. Recently, the HOA conducted a reserve study that was requested (and required) in order to determine the HOA's future liabilities for property and assets that it owns. The study determined our total replacement costs for all structures at $366,613, with paving and curbing being a significant portion (approximately 40%) of the total expense. There are also other expenses (such as concrete curbing) that are tied to these common areas.

We have recently contacted our HOA's attorneys to help us answer the following questions:
1) How does the HOA properly allocate the current parking assessment between operating (i.e. snow removal) and capital (reserve allocation) expenses? IS there a legal requirement? (Currently, the IRS does not allow capital allocations to pay for operating expenses.)
2) Should common assessment funds be used to pay for area-specific expenses when a separate assessment is made?
3) What percentage should the parking assessment be of the total assessment?

For all of these questions, we have asked for guidance by looking at both legal requirements and similar communities in our area.

Unfortunately, for a long time the community did not allocate enough funds to cover the future expenses that are associated with the property that the HOA owns and maintains. Recently, dues were raised 10% (including parking assessments) in order to help defray these future expenses. Hopefully, with guidance from our attorneys, appropriate and fair steps will be taken in the near future to protect our property from falling into disrepair while appropriately allocating the expenses associated with such maintenance.

We will update the community on this issue as we have more information.

Scott Hall
Treasurer, Oella HOA